Editas Medicine, Inc. Q1 FY2021 Earnings Call

Thank you, Julian. Good morning, everyone, and welcome to our first quarter 2021 conference call. Earlier this morning, we issued a press release providing our financial results and corporate updates for the first quarter of 2021. A replay of today's call will be available on the Investors section of our website approximately two hours after its completion. After our prepared remarks, we will open the call for Q&A. As a reminder, various remarks that we make during this call about the company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC. In addition, any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statements, even if our views change. Now I will turn the call over to our Chief Executive Officer, Jim Mullen.

Good morning, everyone and thanks for joining us today. In addition to Ron, I’m joined by Lisa Michaels, our Chief Medical Officer; and Michelle Robertson, our Chief Financial Officer. I will start with providing some highlights from the first quarter reviewing our broader corporate strategy. Then, I will hand it over to Lisa to discuss our clinical and preclinical progress, and then Michelle will provide an update on our financial results and cash position. We’ve had a strong start to the year. The BRILLIANCE trial for EDIT-101 is progressing very well, and we expect to share clinical data by year-end. The first clinical site in the RUBY trial for EDIT-301 has been activated, has begun to screen and recruit patients. The pre-IND work for EDIT-301 in beta-thalassemia is advancing, and we expect it to be filed before year-end. We've also made excellent headway in manufacturing side as we prepare all patients in the RUBY trial. We continue to progress our oncology platform with our longstanding partner Bristol Myers Squibb opting into another program this past quarter. And finally, our capital raise for January gives us a comfortable financial position to advance our clinical trials and preclinical pipeline. From an organizational leadership perspective, I'm pleased to announce that Dr. Mark Shearman will be joining us next month as our new Chief Scientific Officer. Mark is an experienced executive who has brought multiple programs from ideation into and through the clinic and has led numerous successful partnerships. He brings an extensive track record of achievements in drug discovery and clinical development across multiple therapeutic modalities. There are two reasons why we believe Mark will be successful as EDITAS CSO. First, his areas of expertise in ophthalmology, immunology, and neurology have considerable overlap with Editas platform medications. Mark will advance our existing programs in these indications, while utilizing a world-class gene editing technology to expand our preclinical pipeline in potentially other therapeutic areas. Second, and more importantly, Mark is a successful and respected leader of large global research teams. As Editas continues to grow, Mark's experience in companies like Merck, and most recently applied genetic technologies will help facilitate the right structure to support our progress and allow us to attract the right talent. Mark's addition significantly strengthens our leadership team, and I look forward to having you join us on our next earnings call. In addition to recruiting Mark, I have spent time during the first months as CEO by meeting with every Editas employee, mostly through a virtual format. These conversations helped me appreciate what draws people to Editas, and what we can do as an organization to attract and retain world-class talent. Speaking with every employee has only strengthened my confidence in our people and the technology and platforms that we're developing. By having these conversations across all levels of the organization, I had a chance to better understand the intricacies of gene editing technology in our platforms, and how we can synergistically leverage these existing assets towards further development. Built on top of our gene editing technology, we have three principal platforms. First, we have in vivo gene editing focused initially on ocular diseases. Next, we have the ex vivo platform focusing on sickle cell and beta-thalassemia. And finally, we have our cellular therapeutic platform focusing on oncology. These three platforms have their own intrinsic values, and they also provide us with building blocks for continued sustained growth. The programs within each of these vehicles serve as proof-of-concept vehicles. Once we demonstrate that we can reduce our gene editing technology to practical applications, then we will have actual products that could impact patients' lives in a way never seen before. These are not just three different areas of therapeutic indications. These are three different ways to use gene editing to solve different problems. And finally, being a leader in genomic medicine requires immense expertise and resources. As we continue to advance our programs, partnerships will be critical for development and commercialization. We will pursue opportunities to extend our leadership and accelerate, enable, and expand our pipeline. We believe we've been successful to date best exemplified by our collaboration with Bristol Myers Squibb, a global leader in oncology. As mentioned, that partnership is progressing along with BMS opting into an additional program this quarter. In addition to a declared development candidate at the end of last year, this marks another important milestone in a span of six months under this collaboration further validating our technological expertise in the space. Overall, I'm extremely happy with our year-to-date progress. There are still challenges that we need to overcome and I have confidence that we'll have the right people in place to accomplish our short-term milestones and our long-term objectives. With that, let me turn the call over to Lisa.

Good morning, Jim. Thank you. Let me start with a brief update on the BRILLIANCE trial for EDIT-101. As you know, we initiated dosing in the second cohort earlier this year. And with our regained momentum, we continue to screen and enroll patients in the study. As part of our progress, a protocol mandated meeting with the independent data monitoring committee is actually planned for the summer. In this meeting, we will review the existing data and decide the necessary steps required to begin dosing the next two pediatric cohorts. It's an exciting milestone since LCA10 is an early onset retinal degenerative disease, resulting in significant vision loss and blindness. And LCA10 is the most common cause of inherited childhood blindness affecting three out of every 100,000 children around the world. So, I'm hopeful that we'll be able to report promising results in the future. We continue to follow all the treated patients for the primary endpoint of safety every three months for the first year, and concurrently we're collecting data to confirm the expected beneficial effects of editing. As Jim mentioned, we plan to share our initial clinical data from the BRILLIANCE trial before the end of this year. Our intent is to include data that represents patients from the first two cohorts of the trial. The progress and learnings from the EDIT-101 trial are also being applied to advance other in vivo ocular programs. This year, we presented preclinical data for Usher Syndrome 2A and retinitis pigmentosa 4 at the most recent annual meetings for the Association of Research in Vision and Ophthalmology, and we've developed a human iPSC derived retinal organoid platform, which provides a practical ex vivo model to study the effects of editing on the human retina. USH2A, a selected deletion of the Exon 13 mutation, restored USH2A protein complex expression and rescued deficits in photoreceptor morphology. Now these results provide evidence of the potential to restore functional USH2A protein function and rescue loss of visual function in the human retina. As for RP4, we've demonstrated clinically relevant editing levels using a dual AV editing system, which adds further validation to our therapeutic strategy. We expect to clear a development candidate for our RP4 program by year. Now transitioning to our ex vivo programs, specifically EDIT-301 for sickle cell disease and beta-thalassemia. We have actually completed our investigator training meeting which included investigators and their clinical trial staff on the protocol and the procedures needed through the complex steps that lead from patient enrollment to cell harvest and subsequent dosing. I'm also very pleased to announce that our first clinical site for the RUBY trial for sickle cell disease has been activated, and that site has now started to approach patients for consent and screening. We anticipate dosing the first patient before the end of the year. Additionally, we are completing preclinical work required to support our application for the IND in beta-thalassemia. We are still on track targeting filing the IND by year-end. We continue to believe that EDIT-301 can differentiate from other approaches through the use of our proprietary engineered Cas12a enzyme, which specifically allows for editing at the beta-globin locus as opposed to other targets such as BCL11A. By demonstrating robust and sustained fetal hemoglobin expression and safety, we aim to have a best-in-class medicine to treat sickle cell disease and beta-thalassemia. Finally, I want to mention our iPSC derived NK cell program. We recently presented two separate posters at the most recent American Association for Cancer Research. The data showed that NK cells that have been edited to knockout CISH and TGF beta with our proprietary CRISPR/Cas12a enzyme demonstrate superior tumor-killing ability when compared to unedited NK cells. We've also shown that NK cells demonstrated improved cytotoxicity and enhanced metabolic function in certain tumor microenvironments. These findings support our belief that edited NK cells will play an important role in the future treatment of solid tumor cancers. We are also exploring additional edits to further enhance the activity of NK cells. I look forward to updating you more on that program before the end of the year. With that, I'd like now to turn things over to Michelle to briefly run through the financial results.

Thank you, Lisa, and good morning, everyone. Editas continues to be in a strong financial position as our portfolio and operations advance forward. Our cash position as of March 31, 2021 was $723 million compared to $512 million at the end of 2020. The proceeds we raised from our January equity offerings have strengthened our balance sheet. We expect our current cash balance will fund our operating plan well into 2023. Our strong capital position leaves us poised to continue executing across our clinical and preclinical pipeline, funding our ongoing BRILLIANCE and RUBY trials, while also enabling the advancement of additional candidates into the clinic and enhancing our manufacturing capabilities. Now turning to revenue and expenses, which we have summarized in our financial results for the first quarter of 2021 and the press release we issued earlier today. Revenue was $7 million compared to $6 million for the same period last year. The majority of the revenue recognized this quarter was attributable to our strategic alliance with Bristol Myers Squibb. Our operating expenses increased year-over-year by approximately $11 million. Research and development expenses increased by $7 million to $42 million compared to $35 million for the same period last year. This increase was driven by nonrecurring charges related to collaboration and success payments to our licenses, as well as higher spending across clinical operations and manufacturing for two clinical programs. General and administrative expenses increased by $4 million to $21 million compared to approximately $18 million in the first quarter of last year. This was mainly a result of increased employee-related expenses. Overall, Editas remains very well capitalized. We have sufficient capital to sustain our operations well into 2023. We continue to be confident in the fundamentals of our technology and expect our strong cash position will help advance our business through a series of potentially important value inflection points. With that, I'll hand it back to Jim.

Thank you, Michelle. It's been a very busy past few months for the company. As I mentioned on our last call, it's truly an exciting time for us with the work we've been doing to advance our programs and explore new possibilities for gene editing. This incredible once-in-a-generation technology, its foundation of science, allows us to conceivably treat nearly every genetic mutation in the human genome. Our existing indications represent only a small fraction of diseases potentially addressable by our technological capabilities. Our continued progress solidifies a place among the pioneers and leaders of gene editing, Editas was originally formed to discover and develop a novel class of genome medicines, and on a daily basis, we continue to overcome the numerous technical challenges of transforming gene editing technology into clinically practical therapeutics. We continue our efforts to expand the reach of gene editing across our platforms and look forward to updating you on additional future developments. As always, we thank all of you for your interest and support. And with that, we'll open it up to questions and answers.

Thank you very much. The first question comes from Joon Lee at Truist Securities. Please go ahead.

Hi. Thanks for taking our questions. So looking at the Harbor poster for RP4, you set the threshold for therapeutic efficacy at 25% editing, which is higher than the 10% test for LCA10. How do you get there, and given this RP4 is a dominant negative condition and requires a knock-in, knockout strategy, can you just walk us through the editing efficiency in vivo that you expect? And I have a follow-up.

All right. I'll jump in, but I'm going to give you the clinicians’ rather than the scientific answer more than anything else. For the LCA10 program, the main modeling data suggests that at least 10% of normal retinal function would be required in order to restore or have some level of best visual acuity. It's only a threshold result. In fact, 10% was identified as the lowest dose at which we would expect to be able to start restoring vision. Our nonclinical data suggests that we're actually able to achieve editing efficiencies that are much higher than that. The current dose that we're using in the clinical study in the mid cohort is predicted to provide 30% or better levels of editing. So, part of the dose finding of the study is to actually determine the appropriate level of editing required to get an optimum response. As for the RP4 program, you're absolutely right. This is one of the real advantages of gene editing. The CEP290 gene, the RP4 gene is way too large to be treated through a normal gene therapy approach. With gene editing, we're able to make some corrections. In this particular case of RP4, because it is an autosomal dominant effect, the editing efficiency needs to take into account both the ability to knock out the dominant gene causing the mutation and to knock in a gene that's able to replace vision. We have projected here at the moment that 25% is the expected threshold to get that response, but our ability to treat in the clinical setting may be higher.

Okay. Looking forward to this clinical data. And for the LCA10 that you're advancing, so for the second cohort and following, have you changed any inclusion criteria to accommodate the enrollment? And how has enrollment been since the vaccinations have rolled out? And how many patients have you dosed so far?

So far to date, we have dosed four patients. The protocol is currently written in such a way that the first two patients were selected on the basis of having only light perception and were dosed at the lowest dose expected to provide some predictive editing. The primary purpose of the study is more related to potential safety concerns. Because we saw no safety issues in those first two patients, we made modifications to the protocol to allow enrollment of patients with some measurable visual acuity and not be quite so strict in restricting the total patient population enrolled. This change was made before the beginning of the year. A small change in the protocol itself has allowed for much easier identification of patients, and we are tracking moving forward to complete this mid-dose cohort and start the first cohort by the end of the year. As for COVID and vaccines, the real benefit for us has been the loosening of travel restrictions and restrictions within hospitals, which has facilitated patients traveling to treatment sites to receive their therapy. So, I'm not sure that COVID vaccination has changed anything, but it has made it easier for patients to access treatment.

Got it. Just remind us how many sites are capable of doing this? The trained sites?

We are going to sites and centers where we have people that are comfortable with retinal injection. We are continuing to expand our sites, including clinical sites that have been set up as part of our non-interventional studies. Those patients are beginning to roll into the treatment center study. We are trying to limit it to sites where retinal surgeons are capable of producing reproducible and consistent injections in the back of the eye.

Thank you so much. Next question from Cory Kasimov from J.P. Morgan. Your line is open.

Hey, good morning, guys. Thanks for taking my questions. First one is what's the gating factor to dosing patients in the RUBY trial since sites are active and investigators are trained? What more needs to happen there? And then with regards to your LCA10 program, prior to the IDMC meeting this summer, do you have to dose any additional adult patients to have a sufficient safety package before dosing pediatric patients? If so, how many more do you think you'll need?

In terms of site selection, we identified two sites that had pre-identified patients who would be willing to undergo treatment. One of those two centers is now up and running, and we're expecting the second one to be operational shortly. This gives the center an opportunity to approach patients to review the protocol and have them sign consent. We started a fairly laborious process, which is consistent across the entire space. The process for freezing patients with sickle cell disease is relatively complicated. Once a patient is identified and undergoes screening procedures, they either need to start a transfusion regimen or be on a chronic transfusion regimen, partially diluting the hemoglobin F. Activating this procedure may take several consecutive days to collect enough cells for the editing process. This process could take about four to five months from the time of consent to treatment. As for additional safety data before the pediatric cohort, that is determined based on the observations from the adult cohort and the safety evaluation.

Okay. Thank you, Lisa. Appreciate all the color.

Thank you so much. Next question from Phil Nadeau from Cowen & Company. Your line is open.

Good morning. Thanks for taking my questions. First one is just a follow-up to Cory. In terms of the efficacy measures that you can look at in the IDMC meeting, can you give us some sense of what you consider promising and meaningful signals of efficacy? More broadly, what do you hope to achieve in the adult patients and what you hope to achieve in the pediatric patients in terms of visual acuity? Is stabilization good enough? Or do you really hope to see improvements?

With this patient population, in general, we've observed minimal decline in vision during late stage follow-up. Majority of vision loss occurs in childhood. One of our real goals is to reach kids sooner since neuroplasticity and experience may benefit them. Ultimately, we're looking for functional evidence of the edit itself, measured by anatomical changes or responses to light, providing a signal that the editing has resulted in a physiologic change. Of course, the ultimate goal is to have a meaningful impact for patients, which will be part of our measurements that we perform.

That's very helpful. Then second question on the 301 program as you are aware, there’s some controversy surrounding preconditioning and gene therapies in sickle cell following the cases of MDS and AML from different programs. Do you have any thoughts on treating sickle cell patients with genomic therapies in light of the conditioning regimens currently being used?

I'm somewhat philosophical about it because I’m still not sure what occurred in the other studies. It’s interesting that one patient said to have myelodysplasia is now said to have a transfusion related issue, which suggests there’s something happening to those cells. The good news is it's not malignancy. The risk-benefit profile seems to favor gene therapy and gene editing methods. One of the biggest limitations to acceptance of the therapy across populations is the intensity of the chemotherapy. The next big step will be lower toxicity regimens while still maintaining efficacy.

Perfect. That's very helpful. Thanks for taking my questions.

Thank you so much. Next question from Gena Wang from Barclays. Your line is open.

Thank you for taking my questions. I have two. One is regarding the RUBY trial in sickle cell disease. I'm just wondering if you can give us a little bit update regarding the partial clinical hold and for the product consistency that the FDA is looking for. Do you need to clear that in order to also file an IND for beta-thalassemia? The second question is more like a technology platform question regarding your eye disease indications. In all of these indications, are you using AAV as a delivery vehicle? Just wondering what the longest animal data you show the safety given that CRISPR/Cas9 could be long-lasting?

First, I want to say the clinical sickle cell program is a distinctly different creature than the beta-thalassemia program. The agency is looking for clear evidence of variability to reduce sickling in those cells. For beta-thalassemia, the relevant outcome is the ability to demonstrate conversion to hemoglobin F. As of today, we have no concerns regarding the potency for beta-thalassemia or the assays we have in place. We’re completing several non-clinical studies to support our plans for moving forward with the potency assay and will engage with the agency this summer. We hope to have the clinical hold lifted in time to start the main part of the study. Regarding the delivery vehicle, I’m not fully prepared to discuss that at this moment.

Thank you. Next question from Tiago Fauth from Credit Suisse. Your line is open.

Hi. Thanks for taking our question. This is Roger on for Tiago. You shared some preclinical data at ARVO on your in vivo ocular program. Can you briefly highlight the key differences and constructs among these programs and whether or not they’re modular?

I think one of the interesting points is the targets we're addressing in the ocular programs—RP4, USH2A and LCA10—cannot be treated by traditional gene therapy methods due to their size. Gene editing allows us to make corrections. RP4 and other genes are too large for gene therapy approaches, hence editing presents a clear advantage. These diseases are inherited autosomally dominant, meaning we can knock out the non-functional gene and knock in a corrected gene to restore function. Each approach is targeted specifically to each disease, although we are building on experiences with subretinal injections and learning from proof of concepts to show efficacy across the board.

Alright. Thank you.

Thank you. Next question from Jay Olson from Oppenheimer. Your line is open.

Thanks for taking the question. Can you walk us through the timeline to file an IND for the NK cell program? For the manufacturing of your NK cell program, is that something that you would do in-house?

I can take that. The timeline for the IND—we're consulting with opinion leaders to decide on our first construct. We’ve presented data on CISH and TGF-beta, but have additional constructs in the pipeline. For the manufacturing, we plan to conduct initial clinical manufacturing largely in-house or in collaboration with a strategic partner, possibly Catalent.

Great. Thanks for taking the questions.

Thank you so much. We don’t have any further questions at this time. Jim, you may proceed.

Thanks. Thanks so much for all the questions. We've got a few questions that we need to tidy up and get back to you with some answers on. It'll be great to have Mark Shearman on the next call because some of those will probably more in his wheelhouse than Lisa's. I want to thank everybody for participating in today's call for the great questions and for your support as we try to bring this transformational new technology and turn it into real medicines to help patients. Thanks so much and we'll talk to you next quarter.

That does conclude our conference for today. Thank you for participating. You may all disconnect.